Southwest Airlines and Microeconomics

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Southwest Airlines and Microeconomics
John Divler
Rasmussen College

Author Note
This research is being submitted on June 14, 2010, for Mr. Bergeen’s Microeconomics course at Rasmen College by John Divler.

Southwest Airlines and Microeconomics
Southwest Airlines was created in 1967 and is headquartered in Dallas, TX. Southwest offers flights to their passengers to get them to their destinations when they want to get there, on time, at the lowest possible fare. The advantage that Southwest has in the marketplace is their commitment to their customers. The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit (About Southwest, 1988). Following their mission statement gives them a competitive advantage compared to other airline companies.

The airline industries success depends greatly on the health of the U.S economy because the economy affects air travel by business and consumer passengers. Many areas of the economy affect Southwest in the airline industry. Some of these are shifts in the supply and demand, elasticity, and their competition in the market.

Shifts in the supply and demand for Southwest Airlines within the industry have changed significantly. The demand has gone up because the supply has gone down. For example, many Airline companies have felt the sting of higher jet fuel costs. Southwest is one of the existing airline companies that have reduced the amount of flights that they book due to rising fuel costs. This creates a lower supply with a higher demand. However the demand may go down due to a rise in ticket prices.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, (2012) “Despite modest losses, excluding special items, our first quarter results were notable, with outstanding revenue production and, except for jet fuel, better-than-expected operating costs.” Southwest...
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